On September 27, Alex Meruelo announced a $1 billion project for Reno. Meruelo owns the Grand Sierra Resort, the GSR.
It was an attention-getting announcement for more than one reason. The plans include a new basketball arena for the University of Nevada’s men’s basketball team; during the announcement, the president of the university stood by, celebrating it. Brian Sandoval, besides being president of the university, is a former governor of Nevada. Coincidently, Sandoval was the governor who negotiated with Tesla for the mega-factory that changed the trajectory of the economy of Reno. His support is meaningful.
The university’s basketball coach was over the moon with excitement imagining the top-tier recruits that the new arena would attract. ESPN sees the arena as a magnet for higher-level games, championships, and media attention. And that is just the basketball element of the plan. Meruelo and others wasted no time before dreaming up Las Vegas-like entertainment with Taylor Swift, Beyonce, Rihana, Lady Gaga, and who knows what other performance giants might be willing to come to Reno. The GSR marketing director is not ruling anyone out.
The project has much more to excite Renoites. It includes a new hotel tower adding 800 rooms to the existing 2,000 and a new Grand Bay water feature, which one imagines would be like the Bellagio dancing fountains. Finally, there would be 300 residential units. “The vision is to transform GSR into a destination where community, sports, and entertainment come together,” Meruelo said during the news conference.
No one has demonstrated that much faith in Reno since 1978. Ironically, GSR is the latest iteration of the MGM Grand, which opened in that year. MGM had the largest casino floor in the world when it opened on Memorial Day 1978. It featured Hello Hollywood Hello, which played for 11 years and attracted seven million people. In 1986, the Grand sold to Bally’s for $440 million. It was not 21st century Bally’s Corporation, but the 20th century company whose main business was building slot machines. Bally’s was on a course to diversify and was buying other businesses, including casinos and health spas. Bally’s soon fell into financial trouble caused by its spending spree and put the property up for sale. The Hilton Corporation purchased it for $83 million in 1992.
In 2006, Meruelo’s company picked up the no-longer-grand Grand for $150 million and renamed it the Grand Sierra Resort. Meruelo is an investor with interests in restaurants, banks, sports teams, real estate, construction, television, and radio stations; he also owns the Sahara in Las Vegas. A first-generation son of Cuban parents, he’s been a go-getter and money maker since his first big real estate deal and a venture selling pizza. When he came to Reno, few knew who he was and most thought his GSR would suffer the same fate as its predecessors.
Seventeen years later, it is possible to say that Meruelo and his grand vision did not fail. That fact is further demonstrated by his proposal. He intends to invest a billion dollars in Reno. No one, not even the brave pioneers of 1978 and there were five in all, had that much faith in the Reno market. And in 1978, casinos were found only in Nevada and New Jersey. Believing in Reno was much easier. As an aside, four of the five properties that opened that year failed; only MGM has continued to function, albeit under other names and owners.
The casino industry in 2023 is vastly different than 45 years ago. There are more than 1,000 casinos in the United States now and a few hundred are huddled around what used to be Reno’s feeder market. The competition is intense, including some very large and successful casinos near San Fransisco and Sacramento. And Reno itself has three thriving casino operations in the Atlantis, Peppermill, and Caesars-owned Eldorado.
Nationally, companies are investing a billion or two in casinos, but usually they want a bigger market. New York, Chicago, and Washington, D.C., have been judged worthy of that size investment. And of course, so has Las Vegas. In fact, a billion dollars is the minimum bet in Las Vegas. CityCenter, which opened in 2009, cost $8.5 billion. The next resort to open on the Strip will be the Fontainebleau on December 13. Built for an estimated $3.7 billion, it is promising to be another in a long line of spectacular developments on the Strip.
The Strip is unique. It generated $1.5 billion in gaming in the first eight months of 2023; Reno in the same period produced $140 million. Vegas gets more than 40 million visitors a year, Reno closer to 4 million. The relative numbers beg the question, why would anyone put $1 billion into a casino in Reno?
No one can answer that question except Alex Meruelo. It does not seem logical. However, with his long stream of successes, it is hard to argue against his logic. Meruelo has proven his business acumen over and over. Even the naysayers of 2006 when he bought the former MGM Grand can see that after 17 years, Meruelo seems knows more about investing and operating a casino than most.
